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Newegg finally goes public, with financial analysts expecting big things

Online retailer Newegg today announced plans to go public, filing for a $175 million IPO, according to an SEC filing.

Newegg is best known as a technology e-tailer, but has expanded of late to include other consumer electronics.  Since launching in 2001, the company has been profitable every year, with $2.1 billion in sales in 2008.  In 2007, the company saw $1.9 billion in sales, with the number expected to increase as Newegg expands its business.

The company has seen dramatic success after making changes to support small- and medium-sized businesses in the United States.  Newegg also has its sights outside the United States, with China expected to be an important step in the company's continued expansion.  Furthermore, Canada also is expected to be a big market for Newegg, with many Canadians long requesting to be able to make purchases from the site.

The company does have to deal with several issues in the immediate future, including a patent infringement lawsuit filed by Soverain Software, according to the IPO registration filing.  If Soverain is successful in getting an injunction against Newegg, the company may be forced to "stop or alter certain of our business activities."

In the future, Circuit City -- although its physical stores went bankrupt, a liquidator purchased the company's online business and keeps it running -- will lead the charge of online businesses that aim to derail Newegg.

The IPO will be handled by Citi, JP Morgan, and the Bank of America, with Newegg's largest shareholder, Insight Venture Partners, also completing another IPO earlier in the year.



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RE: mixed feelings
By Cypherdude1 on 9/29/2009 11:53:56 AM , Rating: 2
quote:
one advantage private companies have is they don' have to answer to shareholders or whatever expectations Wall Street has set

I agree. The first thought I had when I read this was, "there goes Newegg." Public companies must answer to Wall Street and they must show a profit every year. When a company loses money, their stock get hammered. Expect to see marked changes in the near future. I suspect these changes will include less selection due to their dropping items which don't sell as well, higher prices, stricter return policies, fewer personnel, and less phone contacts. It looks like we're going to have to read the fine print before we buy from Newegg now.


RE: mixed feelings
By kmmatney on 9/29/2009 2:18:53 PM , Rating: 2
Not only do they have to show profit, but they have to show that profit is increasing each year. They can make $25M profit in a year, and still look bad and have the stock go down. I don't see this as a good thing - I'm thinking some of the higher ups just want a big payday. That's what happened with my company after going public - a few higher ups became millionaires, while the company went bankrupt several years later.


RE: mixed feelings
By astralsolace on 9/30/2009 1:27:11 PM , Rating: 3
That's not true.. What happens is that when a company doesn't meet the industry analysts' expectations, people re-evaluate their investments.

If a company is reliably profitable, even if they're not increasing their profits by huge amounts each year (except for inflation), then their stock will still be worth owning.

Companies with stable/reliable profits, but without expansion usually send their profits back to the shareholders, i.e. dividends. They're called value stocks.


RE: mixed feelings
By JKflipflop98 on 10/6/2009 5:58:22 PM , Rating: 2
You are obviously correct. However the real issue here is that the newegg that we all know and love is going to tear itself to peices trying to keep that "constant expansion" image going.

Less staff, more hours for the ones that stay, higher prices, stricter return policy, and many other wonders of our capitalistic regime will be implanted upon them.

In short, they just took away all the reasons people love Newegg. The IPO is going to kill them.


"You can bet that Sony built a long-term business plan about being successful in Japan and that business plan is crumbling." -- Peter Moore, 24 hours before his Microsoft resignation

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